Corona justifies halving the franchise fee – mr. RCWL Albers – dated February 1, 2022
In a recent ruling by the Amsterdam Court of Appeal, the court reversed a cessation of the franchisee’s exploitation ordered by a court in preliminary relief proceedings.
The court considered it justified by an appeal to unforeseen circumstances that the franchisee had paid less franchise fee during lockdowns. A legal basis that has been frequently used in recent years by tenants to (successfully) negotiate rent discounts.
Although an appeal to unforeseen circumstances (Section 6:258 of the Dutch Civil Code) is not exclusively reserved for parties to a lease, litigation has mainly taken place in the context of lease agreements in recent years.
In line with this jurisprudence, the court considers in this ruling on the franchise agreement that:
“The possibility of the outbreak of a crisis of this magnitude was not foreseen or (apparently) intended by the parties in the franchise agreement. It is incorrect to allow the consequences of this to be unilaterally for the account and risk of Amstel (the franchisee), a division of that risk (on a 50/50 basis) for the months in which the Julianaplein location had to be closed in whole or in part due to corona measures imposed by the government is more obvious.”[1]
This reasoning of the court is understandable in itself, but it is not clear from the ruling how this relates to the fact that the franchise fee depends on turnover. In this case, the franchise fee was 4% of turnover. A logical consequence of (partial) lockdowns is of course that turnover is falling and that already for this reason less franchise fee is paid. Unlike with (most) rental agreements, there is no monthly fixed contribution in this case.
In my view, this aspect has wrongly not been included in the considerations of the Court of Appeal and in doing so, the Court of Appeal seems (perhaps unintentionally) to introduce a rule of law that makes it possible for franchisees (in the sectors affected by corona) to set their turnover-dependent franchise fee for the leave half unpaid or even claim it back.
[1] See ECLI:NL:GHAMS:2021:16, paragraph 3.10.
Ludwig & Van Dam lawyers, franchise legal advice.
Do you want to respond? Then email to albers@ludwigvandam.nl
Other messages
On the edge of a franchisee’s exclusive territory
The Court of Appeal of Arnhem-Leeuwarden ruled on 15 May 2018, ECLI:NL:GHARL:2018:4395, on the question whether a franchisor has a branch just over the edge of the exclusively granted protection area.
Can a franchisee cohabit with a competing entrepreneur?
Can a franchisee violate a non-compete clause by cohabiting with someone who runs a competing business? On January 12, 2018, the District Court of Central Netherlands ruled
Not an exclusive catchment area, but still exclusivity for the franchisee
The judgment of the District Court of Noord-Holland dated 18 April 2018, ECLI:NL:RBNHO:2018:3268, ruled on the exclusivity area of a franchisee.
Supermarket letter – 23
AH may not reduce wages when taking over personnel from AH franchisees;
Termination or dissolution of the franchise agreement by the franchisee
In principle, franchise agreements can be terminated prematurely, for example by cancellation or dissolution. On 21 March 2018, the District Court of Overijssel ruled on ECLI:NL:RBOVE:2018:1335 on
Article in Entrance: “Sending mailings”
“Can I make a file of guests' email addresses because I occasionally want to inform them online about events, promotions and new dishes?”